Case Study

The cost of inaction: the value at risk from climate change

Vivid Economics modelled the impact of climate change on financial assets for this high profile report by the EIU, sponsored by Aviva. These first-of-a-kind estimates were only possible due to our world-leading knowledge of climate change economics and the application of innovative modelling techniques.

Our modelling finds that the average value at risk to current manageable assets from climate change is US$4.2 trillion, in present value terms —3 per cent of their current value. The tail risks are more extreme; 6°C of warming could lead to a present value loss worth US$13.8 trillion, using private-sector discount rates. From the public-sector perspective, 6°C of warming represents present value losses worth US$43 trillion —30% of the current value of the world’s manageable assets.